The government on Saturday announced budget for 2010-11 with a total outlay of Rs 3.259 trillion offering score of incentives to the working class besides tax exemptions on food items and relief in health and education sectors. A sizeable 50 percent adhoc increase in salaries and 15% to 20% in pension of government employees has been announced. The budget also envisages employment opportunities for youth, income generating measures for labourers, workers and poor segments. Presenting national budget for 2010-11 in the National Assembly, Federal Minister for Finance, Senator Dr. Abdul Hafeez Sheikh said the global recession, the situation in the neighbouring countries and past policies adversely affected Pakistan's economy.

He said in the next financial year total budget deficit has been estimated at Rs 685 billion that will be met through internal and external resources. While announcing relief to salaried class, the Finance Minister assured that the recommendations given by the Pay and Pension Commission would be implemented during the next three years. He said the incentives given this time include, a reasonable increase in medical and conveyance allowance. In tax sector, keeping in view the general consensus, the government decided to defer Value Added Tax (VAT) till October 1, 2010, he added. The Minister said that it has been proposed that the rate of general sales tax would be increased from 16 percent to 17 percent for the same period.

In order to minimize and discourage the use of electricity, he said, it has been decided to impose ten percent excise duty on air-conditioners and deep- freezers-- mostly used by the upper class. afeez Sheikh further said that one rupee excise duty has been proposed on one filtered cigarette. As a major step forward to reduce tax burden on salaried class, it has been proposed to enhance tax exemption slab from Rs 200,000 to Rs 300,000, whereas for the non-salaried class the exemption will be from Rs 100,000 to Rs 300,000. In order to extend relief in the prices of essential food items, it has been decided to reduce import duty on palm oil to Rs 9,000 per ton, he said. The Finance Minister also announced an allocation of Rs 442 billion for defence sector. Where as the government has allocated Rs 680 billion for re- payment of loans and interests, he added.

He said that despite severe financial constraints, weak and poor segments of the society were not forgotten as they have been provided cover under Benazir Income Support Programme, which provides financial assistance to 3.5 million households with Rs. 1000 on monthly basis to each. Hafeez Sheikh said that according to the 7th NFC Award, the provinces would be paid their due share on quarterly basis, which would be released by the center automatically as per schedule. "No big wig will have to visit finance department for the release of provincial share as now it will be released automatically," he said. While announcing government determination and resolve, the Minister said, maximum austerity measures would be adopted in all the government departments and ministries, reducing non-development sector expenditures.

The government on Saturday announced budget for 2010-11 with a total outlay of Rs 3.259 trillion offering score of incentives to the working class besides tax exemptions on food items and relief in health and education sectors